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CIRCULAR No

CIRCULAR No. 28/2001/TT-BTC OF MAY 3, 2001 GUIDING THE ENTRY OF STATE BUDGET REVENUES AND EXPENDITURES WITH REGARD TO IMPORT TAX AND VALUE ADDED TAX ON IMPORTED GOODS, APPLICABLE TO WATER SUPPLY PROJECTS USING ODA CAPITAL ACCORDING TO THE MECHANISM OF RE-BORROWING FROM THE STATE BUDGET

Pursuant to Article 12 of the Government�s Decree No. 90/1998/ND-CP of November 7, 1998 promulgating the Regulation on the management of foreign loans and repayment of foreign debts;

Pursuant to the Prime Minister�s opinions in Official Dispatch No. 78/CP-KTTH of January 22, 2001 allowing the entry as State budget revenues and expenditures of import tax and value added tax (VAT), applicable to water supply projects using ODA capital according to the mechanism of re-borrowing from the State budget;

The Ministry of Finance hereby guides the implementation thereof as follows:

I. GENERAL PROVISION

1. Subject of application: This Circular guides the entry of State budget revenues and expenditures with regards to machinery, equipment, materials and special-use transport means of water supply projects using ODA capital according to the mechanism of re-borrowing from the State budget (hereafter called re-borrowing water supply projects for short), which have been imported as from January 1, 2001.

2. Annually, in the State budget elaboration period, the investors of re-borrowing water supply projects (called the investors for short) shall have to work out plans on reciprocal capital of the projects, including the reciprocal capital for payment of taxes under the guidance in Joint-Circular No. 06/1998/TTLT-BKH-BTC of August 14, 1998 of the Ministry of Finance and the Ministry of Planning and Investment, which shall serve as basis for the entry of revenues and expenditures through the State budget.

3. The investors shall have to acknowledge as their debts the amounts of money used for payment of import tax and value added tax, which have been entered as revenues and expenditures through the State budget, together with their borrowed capital and shall have to repay them to the State budget when the projects are put into operation.

II. DOSSIERS OF REVENUE AND EXPENDITURE ENTRIES

The investors shall complete their dossiers according to the provisions below and file them to the Ministry of Finance (the External Finance Department) for use as basis for the entry of the payable tax amounts as State budget revenues and expenditures. Such a dossier shall include:

- The decision approving the feasible project issued by the competent agency (to be sent once together with the first request for revenue and expenditure entries);

- The written request sent by the investor to the Ministry of Finance (the External Finance Department), clearly stating the quantity and value of machinery, equipment, materials and special-use transport means imported in each drive and the corresponding tax amounts proposed for entry as revenues and expenditures; names of the entrusted importing unit(s) (if any);

- The annual reciprocal capital plan announced by the competent authorities, including plan on the borrowing of reciprocal capital for tax payment.

- The tax payment notice of the customs office (original or copy certified by the investor).

III. PROCEDURES FOR THE ENTRY OF REVENUES AND EXPENDITURES AND RESPONSIBILITIES OF CONCERNED BODIES

- Within 30 days as from the date of receiving the tax notices from the customs offices, the investors shall have to compile the dossiers according to the provisions in Section II above and send them to the Ministry of Finance (the External Finance Department) together with a written request for revenue and expenditure entries.

- The procedures for the entry of revenues and expenditures among the Finance Ministry�s bodies are stipulated as follows:

+ Within 3 days as from the date of receiving full dossiers, the External Finance Department shall elaborate a dispatch approving the estimates on the transfer of capital from the central budget to the Development Assistance Fund strictly according to the payable tax amounts and send such dispatch to the Sate Budget Department and the investors. In cases where the dossiers need to be supplemented, the External Finance Department shall have to promptly notify the investors thereof for the latter to complete their dossiers.

+ Basing itself on the estimates-approving dispatch made by the External Finance Department, within 5 days the State Budget Department shall issue a spending order effecting the transfer of capital from the central budget to the Development Assistance Fund, an order on the collection of import tax and value added tax and, at the same time, an authorized spending order on behalf of the Development Assistance Fund, transferring capital to the investors for re-borrowing.

- Within 5 days after the date of receiving the revenue and expenditure entry vouchers from the Ministry of Finance, the investors shall go to the Development Assistance Fund to sign a contract for debt acknowledgement and re-borrow the tax amounts already entered as revenues and expenditures.

The maximum term for sub-lending the tax amounts entered as revenues and expenditures shall be equal to that for sub-lending the main foreign loan of the projects. The repayment of the tax debts shall start at the time when the projects are put into operation. The investors shall not have to pay the interests arising from the re-borrowing of the tax amounts which have been entered as revenues and expenditures, but have to pay sub-lending service charge to the Development Assistance Fund at the rate equal to that for sub-lending the projects� foreign loans. The Development Assistance Fund shall have to acknowledge such sub-lent tax amounts as their debts to the State budget, and supervise, retrieve and remit them to the State budget.

- Basing themselves on the revenue and expenditure entry vouchers made by the Ministry of Finance and the debt-acknowledging contracts signed with the Development Assistance Fund for the tax amounts entered as revenues and expenditures (copy certified as "copy of the original" by the investors), the customs offices which carry out import procedures shall effect the tax liquidation on the import goods declarations for the investors.

- The units that undertake entrusted importation for the projects shall have to coordinate with the investors in order to provide full import dossiers and vouchers for use as basis for the entry of revenues and expenditures, and bear responsibility for the legality of the supplied documents.

- In unexpected cases where, in the year, the reciprocal capital sources of the projects already inscribed in the annual plans are not enough to cover the payable tax amounts, or for newly-arising projects not yet included in the annual plans, based on the valid dossier sets made by the investors, the Ministry of Finance shall carry out procedures for the entry of such tax amounts as revenues and expenditures. The People�s Committees of the localities that manage the projects shall have to work with the Ministry of Finance (the State Budget Department) and the Ministry of Planning and Investment to make additional entry in the annual reciprocal capital plans.

VI. IMPLEMENTATION ORGANIZATION

1. This Circular takes effect 15 days after its signing. In the course of implementation, if any troubles arise, agencies and units are requested to promptly report them to the Ministry of Finance for studying ways to amend and supplement it.

2. For the outstanding tax debts of goods imported before January 1, 2001, the investors shall have to seek capital for the payment thereof by themselves. The fines imposed on administrative violations in the field of tax to be paid to the customs offices due to the investors� faults shall not be entered as revenues and expenditures. The investors shall have pay such fines by themselves and must not include such fines into investment cost of the projects.

The General Department of Customs shall direct local Customs Departments in handling goods lots of water supply projects using ODA capital according to the mechanism of re-borrowing from the State budget, which have been imported after January 1, 2001, for which the payable tax amounts have not yet been entered as revenues and expenditures, if the investors have sent their official dispatch to register the schedule for the completion of procedures for the entry of tax as revenues and expenditures to the customs offices, the units entrusted to import machinery, equipment, materials and special-use transport means for the projects shall be entitled to receive their goods so as to ensure the implementation tempo of the projects and shall not be subject to coercive measures.

For the Minister of Finance

Vice Minister
LE THI BANG TAM